Working to streamline tax codes for small businesses

By on May 28, 2014

Most can agree the process of filing taxes each year can be overwhelming. For Pennsylvania business owners; however, “overwhelming” may seem like an understatement. Small businesses oftentimes spend thousands of dollars hiring tax experts and are burdened with countless hours of paperwork in preparation for tax deadlines. For some, the process can become a year-long endeavor. While these entrepreneurs would much rather prefer to spend time expanding their business and creating jobs.

Small businesses create more than half of all jobs in Pennsylvania, but instead of encouraging them to grow, our state’s complex tax laws weigh them down with layers of rules and overly complex requirements.

In continuing efforts to promote economic growth and assist job creators, new legislation is being proposed to ease state regulatory burdens on small businesses, while giving owners more incentives to expand. The three proposals are known as the Small Business Tax Fairness Package.

The first proposal would authorize like-kind exchanges. Like-kind exchanges enable a small business to sell a building or equipment and immediately purchase another property or buy more modern technology without an immediate tax penalty. The federal government and every other state, except Pennsylvania, allow like-kind exchanges.

The second proposal would give small businesses the ability to use the Net Operating Loss deduction when filing their Pennsylvania taxes. As the law is currently written, only large businesses can use this deduction. If small businesses invest in expensive equipment the depreciation would be accelerated in the first year, but the overall amount paid to the state would remain the same. Under the proposal, the cap would be increased from $25,000 to $100,000, helping a growing business have the money on hand to invest in additional upgrades.

The third proposal includes a technical change to the state’s tax code that would allow small businesses to have access to the same Section 179 deductions as large corporations. A Section 179 deduction is one that can be made toward a business’s tax liability when it purchases new property, equipment or even software that will help it succeed. By allowing small businesses the same tax deductions as corporations, we are leveling the playing field and helping them survive a slow economic recovery.

As we continue to endure tough economic times, it’s important we do everything possible to attract new business to the Commonwealth and help our current businesses grow. And that certainly includes streamlining the business tax process. Removing unfair tax obstacles for small businesses will allow them to compete effectively, so they can grow more jobs for current and future generations. I am hopeful that the reforms I have mentioned above will be a reasonable first step to removing unnecessary impediments for small businesses. All three proposals are currently garnering co-sponsors in the House and Senate and await consideration by their respective committees.

Steven C. Mentzer, of Lancaster County, was elected to represent the citizens of the 97th Legislative District in the Pennsylvania House of Representatives. Before his election to office, Mentzer served as the treasurer of Manheim Township. He has also been heavily involved in a variety of humanitarian efforts, both locally and globally, since 2006. Visit

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